BOCC_2024_vF1.pdf

BOCC_2024_vF1.pdf Fossil fuel financing by the world’s 60 biggest banks declined for a third year running, research published this week showed, but broader economic shifts leave open the possibility that such momentum could be reversed, one of the report’s authors told Semafor. Overall lending and underwriting to the fossil fuel sector amounted to $705.8 billion in 2023, down from $916 billion in 2021 and $955.5 billion in 2019, the Banking on Climate Chaos report authored by groups including the Rainforest Action Network and the Sierra Club said. There are other qualified positives: fossil fuel companies are increasingly likely to opt for financing from non-bank financial institutions, largely because they face growing questions from banks, and 85% of all financing tracked by the report expires before 2030, suggesting banks are increasingly worried about fossil fuel facilities becoming stranded assets, as growing numbers of analysts project an impending decline in demand for oil and gas. But there are warning signs, RAN Research Manager April Merleaux said. For one, fossil fuel companies have largely avoided borrowing with rich-country interest rates at multi-year highs, a strategy that could well shift if the Federal Reserve, European Central Bank, and Bank of England begin cutting rates this year, as expected. Companies have also used a protracted period of relatively high oil prices to retire debt, meaning their credit profiles have improved. And banks are not entirely eschewing long-duration lending to fossil fuel companies: One bond tracked by the report expires in 2084.